How to reduce telecoms costs

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How to reduce telecoms costs

South African telecommunications prices, fixed and mobile, remain among the highest in the world. Excessive interconnection rates are at the root of high prices. Whilst ICASA has released a further set of draft interconnection regulations, these regulations do not address the issue of interconnection rates and will therefore not have the effect of driving prices down.
 
Thanks RPM and MyBB - this is the best article I've seen for a long time. Gets to the point of our problems.

If Namibia can survive on that costing, with their small, sparse and relatively poor population, SA can easily achieve this.

I do think there's a case for assymetic interconnect rates in the sense that larger carriers should charge less as they have economies of scale and market power.
 
Vodacom and Mtn will not lower rates unless they are absolutely forced to.
If it halved rates that would effectively halve the turnover and then shareholders would jump up and down. Not forgetting that some Government ministers have vested interests in thses organisations
 
"This is not correct. The interconnection charges are a small bit of their turnover."

How is that possible ?
If interconnect fees are R1.25 a minute and they reduced to 60c per minute that is half the revenue stream gone.
Correct me if I am wrong
 
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It's a pitty that ICASA missed an opportunity to sort this out. But, in all fairness, everyone was probably busy staring at the minister's new beamer...

It's a tough call really, buy 2 beamers vs do my job. Now which one should I pick:rolleyes:
 
we can only hope that something will be done about this anti-competitive "fee" sooner rather than later.
 
Excellent article. Hope someone takes notice - not ICASA as they are useless, but by our legislators who can amend ICASA's mandate and allow these matters to be dealt with by the Competition Commission.
 
The NCC therefore recently commissioned a benchmarking study by Research ICT Africa which found that the cost of interconnection for an efficient operator is the rand equivalent of R0.25. The study looked at interconnection rates and the cost of interconnection in various African and European Union countries to arrive at this figure.
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What? The Namibian Communications Commission could actually find a way to determine the actual cost of reasonable interconnection fee's.
OMW!
These NCC people must be freaking geniuses.

ICASA has been unable to do that for the last 8 years.


Thumbs up to ECN Telecoms.
 
Rather than placing the onus on ICASA to carry out a full forward-looking cost analysis, ICASA can permit any operator that is dissatisfied with the benchmarked rate to request a revision of the rate by demonstrating that it has forward-looking long-run incremental cost of interconnection that is above the prescribed ceiling.
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Simple Brilliance!
 
Surprise, surprise - NCC arrived at Telkom cdma interconnect rates!!! Quote:

ECN recommends that ICASA immediately set the interconnection rate at R0.25 (peak) and R0.15 (off peak); this target rate should be applicable for any voice service regardless of the technology used. This is in line with Telkom’s interconnection rates on its new mobile CDMA service (CDMA is a digital cellular technology standard that is used to provide mobile voice telephony and broadband internet access).
 
the R1.25 is the rate that the operators charge each other per minute. let's say a CellC phones Vodacom, Vodacom will charge CellC R1.25, however the customer might pay let's say R2.00. +-R0.75 profit to be made.
so, if the rate is dropped to 60c, CellC will pay Vodacom 60c, and if the customer is charged R0.75 extra, the customer will only pay R1.35. CellC still makes R0.75 on a call.
in the end, in both cases 75c potential profit.
so the customer pays less per minute and the operators still make the same amount of money if you nett off customer to wholesale price
 
prettypotplant said:
the R1.25 is the rate that the operators charge each other per minute. let's say a CellC phones Vodacom, Vodacom will charge CellC R1.25, however the customer might pay let's say R2.00. +-R0.75 profit to be made.
so, if the rate is dropped to 60c, CellC will pay Vodacom 60c, and if the customer is charged R0.75 extra, the customer will only pay R1.35. CellC still makes R0.75 on a call.
in the end, in both cases 75c potential profit.
so the customer pays less per minute and the operators still make the same amount of money if you nett off customer to wholesale price
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Yes, but now Vodacom only makes 60c instead of R1.25. The larger the user base, the larger the hit.

Excellent article. I think this report should go to the DoC and other legislators, not just the regulator.

However, there is nothing to stop cell operators reducing their interconnect fees, but keeping their retail charges unchanged. But without the high interconnect rates, they are much more vulnerable to competition.

Again, one of the many instances in SA where we absolutely need regulation to even out the playing field, before we can reach a point where competition can thrive.
 
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